<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended May 31, 2000
or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the transition period from ______ to ______
Commission File No. 1-13146
----------
THE GREENBRIER COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 93-0816972
(State of Incorporation) (I.R.S. Employer Identification No.)
One Centerpointe Drive, Suite 200, Lake Oswego, OR 97035
(Address of principal executive offices) (Zip Code)
(503) 684-7000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
The number of shares of the registrant's common stock, $0.001 par value per
share, outstanding on June 30, 2000 was 14,254,632 shares.
<PAGE>
THE GREENBRIER COMPANIES, INC.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, UNAUDITED)
<TABLE>
<CAPTION>
May 31, August 31,
2000 1999
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 9,953 $ 77,161
Restricted cash and investments 88 635
Accounts and notes receivable 93,626 47,514
Inventories 144,690 92,495
Investment in direct finance leases 129,411 143,185
Equipment on operating leases 96,376 93,225
Property, plant and equipment 76,633 69,316
Intangibles and goodwill 23,766 4,000
Other 31,928 23,185
--------- ---------
$ 606,471 $ 550,716
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Revolving notes $ 39,125 $ 3,783
Accounts payable and accrued liabilities 167,907 131,474
Deferred participation 53,427 50,439
Deferred income taxes 19,595 17,634
Notes payable 145,927 161,401
Subordinated debt 37,788 37,788
Minority interest 5,190 14,034
Commitments and contingencies (Note 7)
Stockholders' equity:
Preferred stock - $0.001 par value, 25,000 shares
authorized, none outstanding -- --
Common stock - $0.001 par value, 50,000 shares
authorized, 14,255 outstanding at
May 31, 2000 and August 31, 1999 14 14
Additional paid-in capital 50,495 50,495
Retained earnings 90,653 85,534
Accumulated other comprehensive loss (3,650) (1,880)
--------- ---------
137,512 134,163
--------- ---------
$ 606,471 $ 550,716
========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
2
<PAGE>
THE GREENBRIER COMPANIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
May 31, May 31,
----------------------------- ------------------------------
2000 1999 2000 1999
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUE
Manufacturing $ 147,054 $ 152,360 $ 388,236 $ 397,482
Leasing & services 24,861 21,712 69,504 63,616
------------ ------------- ------------ -------------
171,915 174,072 457,740 461,098
COST OF REVENUE
Manufacturing 131,041 133,695 343,124 351,216
Leasing & services 11,817 10,300 36,363 28,837
------------ ------------- ------------ -------------
142,858 143,995 379,487 380,053
MARGIN 29,057 30,077 78,253 81,045
OTHER COSTS
Selling and administrative expense 13,600 13,013 42,189 34,805
Interest expense 5,979 4,390 16,018 14,541
------------ ------------- ------------ -------------
19,579 17,403 58,207 49,346
Earnings before income tax expense,
minority interest, equity in unconsolidated
subsidiary and extraordinary charge 9,478 12,674 20,046 31,699
Income tax expense (4,928) (5,801) (10,891) (14,948)
------------ ------------- ------------ -------------
Earnings before minority interest, equity
in unconsolidated subsidiary and
extraordinary charge 4,550 6,873 9,155 16,751
Minority interest (368) (1,041) (1,512) (1,936)
Equity in unconsolidated subsidiary 59 347 1,325 319
------------ ------------- ------------ -------------
Earnings before extraordinary charge 4,241 6,179 8,968 15,134
Extraordinary charge, net of taxes - - - (938)
------------ ------------- ------------ -------------
NET EARNINGS $ 4,241 $ 6,179 $ 8,968 $ 14,196
============ ============= ============ =============
Basic earnings per share:
Earnings before extraordinary charge $ .30 $ .43 $ .63 $ 1.06
Extraordinary charge - - - (.07)
------------ ------------- ------------ -------------
Net earnings $ .30 $ .43 $ .63 $ .99
============ ============= ============ =============
Diluted earnings per share:
Earnings before extraordinary charge $ .30 $ .43 $ .63 $ 1.06
Extraordinary charge - - - (.07)
------------ ------------- ------------ -------------
Net earnings $ .30 $ .43 $ .63 $ .99
============ ============ ============ =============
Weighted average shares outstanding:
Basic 14,255 14,255 14,255 14,254
Diluted 14,255 14,272 14,275 14,285
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
3
<PAGE>
THE GREENBRIER COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
MAY 31,
-------------------------------
2000 1999
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 8,968 $ 14,196
Adjustments to reconcile net earnings to net cash
(used in) provided by operating activities:
Extraordinary charge - 938
Deferred income taxes 1,961 2,346
Deferred participation 2,988 4,077
Depreciation and amortization 14,789 11,643
Gain on sales of equipment (4,303) (3,540)
Minority interest 1,512 1,936
Other 2,345 506
Increase in assets:
Accounts and notes receivable (46,091) (15,023)
Inventories (53,318) (8,246)
Other (4,452) (478)
Increase in liabilities:
Accounts payable and accrued liabilities 4,767 25
------------- -------------
Net cash (used in) provided by operating activities (70,834) 8,380
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions, net of cash acquired (2,024) (8,553)
Purchase of minority interest (7,618) -
Net payments received under direct finance leases 13,479 12,313
Proceeds from sales of equipment 38,862 31,093
Purchase of property and equipment (54,461) (42,030)
Purchase of intangibles and goodwill - (185)
Use of restricted cash and investments 547 15,368
------------- -------------
Net cash (used in) provided by investing activities (11,215) 8,006
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 40,763 33,586
Repayments of borrowings (20,888) (41,567)
Dividends paid (3,850) (2,565)
Distributions of earnings to minority investors (1,184) (952)
Proceeds from stock options - 29
------------- -------------
Net cash provided by (used in) financing activities 14,841 (11,469)
------------- -------------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (67,208) 4,917
Cash and cash equivalents:
Beginning of period 77,161 41,912
------------- -------------
End of period $ 9,953 $ 46,829
============= =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 12,684 $ 13,195
Income taxes 2,346 5,355
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
4
<PAGE>
THE GREENBRIER COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - INTERIM FINANCIAL STATEMENTS
The accompanying consolidated financial statements of The Greenbrier
Companies, Inc. and Subsidiaries ("Greenbrier" or the "Company") have been
prepared without audit and reflect all adjustments (consisting of normal
recurring accruals) which, in the opinion of management, are necessary for a
fair presentation of the financial position and operating results for the
periods indicated. The results of operations for the three and nine month
periods ended May 31, 2000 are not necessarily indicative of the results to be
expected for the entire year ending August 31, 2000. Certain reclassifications
have been made to the prior year's consolidated financial statements to conform
with the 2000 presentation.
NET EARNINGS PER SHARE - Basic earnings per share ("EPS") excludes
potential dilution, which would occur if additional shares were issued upon
exercise of outstanding stock options, while diluted EPS takes this potential
dilution into account.
PROSPECTIVE ACCOUNTING CHANGES - Statement of Financial Accounting
Standards No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
("SFAS No. 133"), requires that all derivatives be recognized as either assets
or liabilities measured at fair value. Adoption of SFAS No. 133 is currently
proposed to be effective for the Company's fiscal year beginning September 1,
2000. In December 1999 the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, REVENUE RECOGNITION IN FINANCIAL STATEMENTS ("SAB
No. 101"), which, as amended, the Company is required to implement beginning
June 1, 2001. Management is currently evaluating the effects of both SFAS No.
133 and SAB No. 101.
MANAGEMENT ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. This includes evaluation of the remaining
life and recoverability of long-lived assets. Actual results could differ from
such estimates.
INTANGIBLES AND GOODWILL - Intangibles and goodwill are generally amortized
over twelve years using the straight-line method.
Certain notes and other information have been condensed or omitted from the
interim financial statements presented in this Quarterly Report on Form 10-Q.
Therefore, these financial statements should be read in conjunction with the
consolidated financial statements and notes thereto contained in the Company's
1999 Annual Report incorporated by reference into the Company's 1999 Annual
Report on Form 10-K.
NOTE 2 - INVENTORIES
<TABLE>
<CAPTION>
May 31, August 31,
(IN THOUSANDS) 2000 1999
--------- ----------
<S> <C> <C>
Manufacturing supplies and raw materials $ 21,934 $ 10,953
Work-in-process 54,498 66,255
Railcars held for sale or refurbishment 68,258 15,287
--------- ----------
$144,690 $ 92,495
========= ==========
</TABLE>
5
<PAGE>
THE GREENBRIER COMPANIES, INC
NOTE 3 - COMPREHENSIVE INCOME
The following is a reconciliation of net earnings to comprehensive income:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
(IN THOUSANDS) MAY 31, MAY 31,
--------------------------- ---------------------------
2000 1999 2000 1999
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Net earnings $ 4,241 $ 6,179 $ 8,968 $ 14,196
Foreign currency translation adjustment, net of tax (1,157) (90) (1,770) (1,125)
------------ ------------- ------------- -----------
$ 3,084 $ 6,089 $ 7,198 $ 13,071
============ ============= ============= ===========
</TABLE>
NOTE 4 - SEGMENT INFORMATION
Greenbrier has two reportable segments: manufacturing and leasing &
services. The accounting policies of the segments are the same as those
described in the summary of significant accounting policies in the consolidated
financial statements contained in the Company's 1999 Annual Report. Performance
is evaluated based on margin, which is presented on the Consolidated Statements
of Operations. Intersegment sales and transfers are accounted for as if the
sales or transfer were to third parties, that is, at market prices. Intersegment
elimination of manufacturing revenues are reversed when the related railcars are
sold to a third party by the leasing segment.
The information in the following table is derived directly from the
segments' internal financial reports used for corporate management purposes.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
(IN THOUSANDS) MAY 31, MAY 31,
---------------------------------- ----------------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUE:
Manufacturing $ 149,198 $ 153,492 $ 441,463 $ 416,892
Leasing & services 31,054 30,949 89,221 85,413
Eliminate intersegment (8,337) (10,369) (72,944) (41,207)
------------ ------------ ------------ ------------
$ 171,915 $ 174,072 $ 457,740 $ 461,098
============ ============ ============ ============
</TABLE>
NOTE 5 - NOTES PAYABLE
In February 1999 Greenbrier issued $30.0 million of senior term notes due
2006 (the "Notes"). In conjunction with the issuance of the Notes, $22.0 million
of leasing equipment notes payable were repaid. The early retirement of this
debt resulted in a $0.9 million extraordinary charge (net of income taxes of
$0.7 million) in the second quarter of fiscal 1999 for prepayment penalties and
the write-off of deferred loan costs.
6
<PAGE>
THE GREENBRIER COMPANIES, INC
NOTE 6 - ACQUISITIONS
Effective September 1, 1999, Greenbrier completed the acquisition of a
portion of the minority investor's interest in the Canadian manufacturing
subsidiary utilizing operating cash flows and available lines of credit.
In January 2000 Greenbrier completed the purchase of the Freight Wagon
Division of DaimlerChrysler Rail Systems GmbH located in Siegen, Germany. The
acquired operation provides expertise in the fields of engineering, design,
sales and marketing and project management. It also includes a comprehensive
portfolio of railcar designs certified for the European marketplace.
Accordingly, a significant portion of the assets acquired are intangibles. The
purchase was initially funded with a cash payment of $1.5 million and the
assumption of net liabilities of $20.0 million. The acquisition was completed
utilizing operating cash flows and available lines of credit. Results of
acquired operations have been included in the accompanying financial statements
from the date of acquisition. Disclosure of the acquisition on a proforma basis,
as if it had taken place on September 1, 1999, has not been provided as it is
not material to the consolidated financial statements or results of operations.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Greenbrier is involved as a defendant in litigation in the ordinary course
of business, the outcome of which cannot be predicted with certainty. Litigation
has been initiated by former shareholders of Interamerican Logistics Inc.
("Interamerican"), which was acquired in 1996 and the operations of which were
disposed of in 1998. The plaintiffs allege that Greenbrier violated the
agreements pursuant to which it acquired ownership of Interamerican and seek
damages aggregating $4.5 million Canadian. Management believes that any ultimate
liability resulting from litigation will not materially affect the financial
position, results of operations or cash flows of the Company.
NOTE 8 - SUBSEQUENT EVENTS
Subsequent to May 31, 2000, Greenbrier issued $12.0 million and Euro 8.0
million (approximately $8.0 million at the July 12, 2000 exchange rate) term
notes due 2011. Proceeds will be used to provide financing for European
operations.
Subsequent to May 31, 2000, Greenbrier also entered into revolving loan and
bank guarantee (letters of credit) facilities totaling 7.5 million German
deutschemarks ($3.7 million at the July 12, 2000 exchange rate) and 60.0 million
deutschemarks ($30.0 million at the July 12, 2000 exchange rate), respectively,
to support European operations. The Company has utilized approximately 40.0
million deutschemarks ($20.0 million at the July 12, 2000 exchange rate) of the
guarantee facility.
7
<PAGE>
THE GREENBRIER COMPANIES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Greenbrier currently operates in two primary business segments:
manufacturing and leasing & services. The two business segments are
operationally integrated. With operations in North America and Europe, the
manufacturing segment produces double-stack intermodal railcars, conventional
railcars, marine vessels and forged steel products and performs railcar
refurbishment and maintenance activities, a portion of which is for the leasing
operation. In Europe the Company also manufactures new freight cars through the
use of unaffiliated subcontractors. Such activities are included in the
manufacturing segment. The leasing & services segment owns or manages
approximately 36,000 railcars for railroads, institutional investors and other
leasing companies.
Railcars are generally manufactured under firm orders from third parties,
and revenue is recognized when the cars are completed and accepted by the
customer. From time to time, Greenbrier commits to manufacture railcars prior to
receipt of firm orders to maintain continuity of manufacturing operations and
may also build railcars for its own lease fleet. Railcars produced in a given
period may be delivered in subsequent periods, delaying revenue recognition.
Revenue does not include sales of new railcars to, or refurbishment services
performed for, the leasing & services segment since intercompany transactions
are eliminated in preparing the consolidated financial statements. The margin
generated from such sales or refurbishment activity is realized by the leasing &
services segment over the related life of the asset or upon sale of the
equipment.
OVERVIEW
Net earnings for the three months ended May 31, 2000 were $4.2 million or
$0.30 per diluted share compared to $6.2 million or $0.43 per diluted share for
the comparable prior period. Net earnings for the nine months ended May 31, 2000
were $9.0 million or $0.63 per diluted share compared to $14.2 million or $0.99
per diluted share for the comparable prior period. Net losses from the European
operations were $2.3 million for the three months ended May 31, 2000 as compared
to $0.8 million for the comparable prior period. Net losses from the European
operations were $6.1 million for the nine months ended May 31, 2000 as compared
to $2.3 million for the comparable prior period.
In January 2000 Greenbrier completed the purchase of the Freight Wagon
Division of DaimlerChrysler Rail Systems GmbH located in Siegen, Germany. The
acquired operation provides expertise in the fields of engineering, design,
sales and marketing and project management. It also includes a comprehensive
portfolio of railcar designs certified for the European marketplace.
Accordingly, a significant portion of the assets acquired are intangibles. The
acquisition was completed utilizing operating cash flows and available lines of
credit. Results of the acquired operation, which include the sale of freight
cars manufactured by unaffiliated subcontractors, have been included in the
accompanying financial statements from the date of acquisition.
New railcar delivery and backlog information disclosed herein includes all
facilities, including the joint venture in Mexico, which is accounted for by the
equity method, as well as the freight cars manufactured by subcontractors in
Europe. Results of the Mexican operations are included in Equity in
unconsolidated subsidiary in the Consolidated Statements of Operations.
THREE MONTHS ENDED MAY 31, 2000 COMPARED TO THREE MONTHS ENDED MAY 31, 1999
MANUFACTURING SEGMENT
Manufacturing revenue for the three month period ended May 31, 2000 was
$147.1 million compared to $152.4 million in the corresponding prior period, a
decrease of $5.3 million, or 3.5%. The decrease is due primarily to a decrease
in North American revenues as a result of reduced deliveries of new railcars
partially offset by an increase in European revenues due to the inclusion of the
newly acquired operation. Deliveries of new railcars, which are the primary
contributor to revenue, were approximately 2,000 units in the current period
compared to approximately 3,000 units in the prior comparable period. Reduced
railcar deliveries attributable to the joint venture in Mexico, which is
accounted for under the equity method, comprise 57.8% of the total decline in
deliveries.
Manufacturing gross margin was 10.9% for the three months ended May 31,
2000 compared to the prior period gross margin of 12.3%, a decrease of 1.4%. The
decrease is primarily due to reduced production rates and a more competitive
market environment in North America, partially offset by higher margins from the
newly acquired European operation.
8
<PAGE>
THE GREENBRIER COMPANIES, INC.
The backlog of railcars to be manufactured for sale and lease at all
facilities as of May 31, 2000 was approximately 5,900 railcars with an estimated
value of $340.0 million compared to 5,100 railcars valued at $330.0 million as
of February 29, 2000. Subsequent to May 31, 2000, orders in excess of 2,100
railcars valued at approximately $120.0 million were received.
LEASING & SERVICES SEGMENT
Leasing & services revenue was $24.9 million for the three months ended May
31, 2000, an increase of 14.7% over the $21.7 million recorded in the
corresponding prior period. The increase is primarily due to higher gains on
sales of leased equipment.
Pre-tax earnings realized on the disposition of leased equipment during the
quarter amounted to $3.9 million compared to $0.3 million for the corresponding
prior period.
Leasing & services operating margin was 52.5% for the three month period
ended May 31, 2000 compared to 52.6% in the corresponding prior period. The
benefit derived from the gain on the sale of leased equipment was offset by
lower margins from other leasing & services activities.
OTHER COSTS
Selling and administrative expense increased $0.6 million, or 4.6%, to
$13.6 million for the three months ended May 31, 2000 as compared to $13.0
million in the prior comparable period. The increase is primarily due to the
addition of the European operations and increased research and development
costs. These increases were partially offset by cost reduction measures.
Interest expense increased $1.6 million, or 36.4%, to $6.0 million for the
three months ended May 31, 2000 as compared to $4.4 million in the prior
comparable period, as a result of both increased borrowings and cost of
borrowings.
Income tax expense represents an effective tax rate of 42.0% on U.S.
operations and varying effective tax rates on foreign operations. The
consolidated effective tax rate of 52.0% in the current period is primarily a
result of European operating losses for which no tax benefit has been
recognized. The consolidated effective tax rate for the prior comparable period
was 45.8%.
Minority interest decreased $0.7 million, or 64.6%, for the three months
ended May 31, 2000 as compared to the prior period as a result of improved
results from the Polish manufacturing operation, offset by reduced earnings from
the Canadian manufacturing operation. Greenbrier increased its ownership
position in both the Polish and Canadian operations.
Equity in unconsolidated subsidiary decreased $0.3 million, or 83.0%, for
the three months ended May 31, 2000 as compared to the prior period as a result
of decreased new railcar deliveries at the Mexican operation.
NINE MONTHS ENDED MAY 31, 2000 COMPARED TO NINE MONTHS ENDED MAY 31, 1999
MANUFACTURING SEGMENT
Manufacturing revenue for the nine month period ended May 31, 2000 was
$388.2 million compared to $397.5 million in the corresponding prior period, a
decrease of $9.3 million, or 2.3%. Deliveries of new railcars, which are the
primary contributor to revenue, were approximately 6,200 railcars compared with
6,700 railcars for the prior period.
Manufacturing gross margin of 11.6% remained consistent with the prior
period.
LEASING & SERVICES SEGMENT
Leasing & services revenue increased $5.9 million, or 9.3% to $69.5 million
for the nine months ended May 31, 2000 compared to $63.6 million for the nine
months ended May 31, 1999. The increase was primarily due to the management of
maintenance contracts, which began in December 1999.
Pre-tax earnings realized on the disposition of leased equipment during the
nine month period ended May 31, 2000 were $4.3 million compared to $3.4 million
in the corresponding prior period.
9
<PAGE>
THE GREENBRIER COMPANIES, INC
Leasing & services operating margin was 47.7% for the nine months ended May
31, 2000 compared to 54.7% for the corresponding period in 1999. The decreased
margin is primarily due to lower utilization of the owned lease fleet, 90.1% at
May 31, 2000 as compared to 98.3% at May 31, 1999.
OTHER COSTS
Selling and administrative expense increased $7.4 million, or 21.3% to
$42.2 million for the nine months May 31, 2000 compared to $34.8 million for the
comparable period in 1999. The increase is primarily due to the addition of the
European operations, increased international sales, marketing and business
development costs, higher employee-related costs and research and development
costs.
Interest expense increased $1.5 million, or 10.3%, to $16.0 million for the
nine months ended May 31, 2000 as compared to $14.5 million in the prior
comparable period as a result of both increased borrowings and cost of
borrowings.
Income tax expense represents an effective tax rate of 42.0% on U.S.
operations and varying effective tax rates on foreign operations. The
consolidated effective tax rate of 54.3% in the current period is primarily a
result of European operating losses for which no tax benefit has been
recognized. The consolidated effective tax rate for the prior comparable period
was 47.2%.
Minority interest decreased $0.4 million, or 22.0%, for the nine months
ended May 31, 2000 as compared to the prior period as a result of improved
results from the Canadian manufacturing operation, offset by reduced earnings
from the Polish manufacturing operation. Greenbrier increased its ownership
position in both the Polish and Canadian operations.
Equity in unconsolidated subsidiary increased $1.0 million, or 315.4%, for
the nine months ended May 31, 2000 as compared to the prior period as a result
of improved manufacturing efficiencies at the Mexican operation.
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operating activities was $70.8 million for the nine month
period ended May 31, 2000 as compared to cash provided by operating activities
of $8.4 million for the nine month period ended May 31, 1999. During the nine
months ended May 31, 2000 assets held for sale, included in inventory, increased
$53.0 million principally due to railcars produced and placed on lease that are
anticipated to be sold in subsequent periods. Accounts receivable at May 31,
2000 included a trade receivable of approximately $40.0 million which was
collected in the beginning of the fourth quarter.
Credit facilities aggregated $126.5 million as of May 31, 2000. A $60.0
million revolving line of credit is available through May 2001 to provide
working capital and interim financing of equipment for the leasing & services
operations. A $40.0 million operating line of credit to be used for working
capital is available through February 2002 for U.S. manufacturing operations. A
$20.1 million (at the May 31, 2000 exchange rate) operating line of credit is
available through March 2001 for working capital for Canadian manufacturing
operations. Operating lines of credit totaling $6.4 million (at the May 31, 2000
exchange rate) are available principally through December 2000 for working
capital for Polish manufacturing operations. Advances under both the revolving
and operating lines of credit bear interest at rates which vary depending on the
type of borrowing and certain defined ratios. At May 31, 2000 approximately $1.0
million, $3.4 million and $3.4 million were outstanding under the U.S., Canadian
and Polish manufacturing operating lines, respectively. Approximately $31.3
million was outstanding under the leasing line of credit as of May 31, 2000.
Available borrowings under these lines are principally based upon defined levels
of receivables, inventory and leased equipment.
Capital expenditures totaled $54.5 million for the nine months ended May
31, 2000 compared to $42.0 million for the nine months ended May 31, 1999. Of
these capital expenditures, approximately $39.0 million and $29.0 million,
respectively, were attributable to leasing & services operations. Leasing &
services capital expenditures for the remainder of 2000 are expected to be less
than $5.0 million. Greenbrier regularly sells assets from its lease fleet, some
of which may have been purchased within the current year and included in capital
expenditures.
10
<PAGE>
THE GREENBRIER COMPANIES, INC
Approximately $15.5 million and $13.0 million of the total capital
expenditures for the nine months ended May 31, 2000 and May 31, 1999,
respectively, were attributable to manufacturing operations. Manufacturing
capital expenditures for the remainder of 2000 are expected to be approximately
$5.0 million and will include plant improvements and equipment acquisitions to
further increase capacity, enhance efficiencies and allow for the production of
new products.
Foreign operations give rise to market risks from changes in foreign
currency exchange rates. Greenbrier utilizes foreign currency forward exchange
contracts with established financial institutions to hedge a portion of the
risk. No provision has been made for credit loss due to counterparty
non-performance.
At May 31, 2000 forward exchange contracts for the purchase of Canadian
dollars aggregated $87.1 million Canadian ($59.0 million US dollars), contracts
for the purchase of Polish zloties aggregated 34.7 million zloties ($7.9 million
US dollars) and contracts for the purchase of US dollars aggregated $8.0
million. These contracts mature at various dates through January 2001. At May
31, 2000 gains and losses of approximately $0.3 million and $1.1 million
respectively, on such contracts have been deferred and will be recognized in
income concurrent with the hedged transactions.
A quarterly dividend of $.09 per share was declared in April 2000 and paid
in May 2000 and a quarterly dividend of $.09 per share was declared in July
2000, to be paid in August 2000. Future dividends are dependent upon earnings,
capital requirements and financial condition.
Management expects existing funds and cash generated from operations,
together with borrowings under existing credit facilities, and long-term
financing to be sufficient to fund dividends, working capital needs, planned
capital expenditures, acquisitions and expected debt repayments.
FORWARD-LOOKING STATEMENTS
Statements contained in Management's Discussion and Analysis of Financial
Condition and Results of Operations that are not statements of historical fact
may include forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, including, without limitation,
statements as to expectations, beliefs and strategies regarding the future. The
following are among the factors that could cause actual results or outcomes to
differ materially from the forward-looking statements: general political,
regulatory or economic conditions, both domestic and international; changes in
interest rates; business conditions and growth in the surface transportation
industry, both domestic and international; currency and other risks associated
with international operations; shifts in market demand; a delay or failure of
acquisitions, products or services to compete successfully; changes in product
mix and the mix between manufacturing and leasing & services revenue; labor
disputes or operating difficulties which might disrupt manufacturing operations
or the flow of cargo; competitive factors, including increased competition, new
product offerings by competitors and price pressures; actual future costs and
availability of materials and a trained workforce; production difficulties and
product delivery delays in the future as a result of, among other matters,
changing process technologies and increasing production; lower than expected
customer orders; the ability to consummate expected sales; delays in receipt of
orders or cancellation of orders; and the financial condition of principal
customers. Any forward-looking statements should be considered in light of these
factors.
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THE GREENBRIER COMPANIES, INC.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Form 8-K
No reports on Form 8-K were filed during the quarter for which this report
is filed.
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THE GREENBRIER COMPANIES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE GREENBRIER COMPANIES, INC.
Date: JULY 14, 2000 By: /s/ LARRY G. BRADY
--------------------------- --------------------------------------
Larry G. Brady
Vice President and Chief Financial Officer
(Principal Financial and Accounting
Officer)
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